Hepburn v. The School Directors. RROR to the Supreme Court of Pennsylvania. ER Action by the school directors of the borough of Carlisle to recover a tax assessed for school purposes on 460 shares of stock of the First National Bank of Carlisle, owned by the defendant Hepburn. This tax was assessed under the following act of Assembly of Pennsylvania of March 31, 1870: "All the shares of National banks, located within this State, shall be taxable for State purposes at the rate of three mills per annum, upon the assessed value thereof, and for county, school, municipal, and local purposes, at the same rate as now is or may hereafter be assessed and imposed upon other moneyed capital in the hands of individual citizens of the State." Another act of Assembly of the same State provided that in Cumberland county wherein was Carlisle: "All mortgages, judgments, recognizances, and money owing upon articles of agreement for the sale of real estate, shall be exempt from taxation except for State purposes," etc. The act of Congress February 10, 1868 (15 Stat. at Large, 34), relating to the taxation of shares in National banks, provided as follows: The legislature of each State may determine and direct the manner and place of taxing all the shares of National banks located within said State, subject to the restriction that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State." The Supreme Court of Pennsylvania decided in favor of the legality of the tax (79 Penn. St. 759), and Hepburn brought this writ of error. Joseph Casey, for plaintiff in error. J. M. Carlisle & J. D. McPherson, contra. Mr. Chief Justice WAITE delivered the opinion of the court. The most important question presented by the assignment of errors is, whether shares of stock in a National bank can be valued for taxation by the State in which the bank is located, at an amount exceeding their par value. It is certain that they cannot be taxed Hepburn v. The School Directors, at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of the State. Such is the express provision of the act of Congress. It is contended that the term "moneyed capital," as here used, signifies money put out at interest, and that as such capital is not taxed upon more than its par or nominal value, the par value of these shares is their maximum taxable value. We cannot concede that money at interest is the only moneyed capital included in that term as here used by Congress. The words are "other moneyed capital." That certainly makes stock in these banks moneyed capital, and would seem to indicate that other investments in stocks and securities might be included in that descriptive term. But even if it was true that these shares can only be taxed as money at interest is, the result contended for would not necessarily follow. The money invested in a bank is not money put out at interest. The money of the bank is so put out and the share of the shareholder represents his proportion of that money. What the amount of this share is, must, in some form, be ascertained in order to determine its taxable value. If the nominal or par value of the stock necessarily indicated this amount, there might be some propriety in making that the taxable value; but, as all know, such is not the case. The available moneyed capital belonging to a bank may be diminished by losses or increased by accumulated profits. Therefore, some plan must be devised to ascertain what amount of money at interest is actually represented by a share of stock. The State of Pennsylvania has provided that this may be done by an official appraisement, taking care to prevent abuses by declaring that such appraisement shall not be higher than the current market value of the stock at the place where the bank is located, and by giving an appeal to the Auditor-General, who is authorized to inquire into the value and correct any errors that may appear. There certainly is no apparent injustice in this. It is not the amount of money invested which is wanted for taxation, but the amount of moneyed capital which the investment represents for the time being. If the value set upon the share does not exceed this amount it will not be assessed at a greater rate than other money at interest. Other plans may be devised to accomplish the same end, but it is Hepburn v. The School Directors. sufficient for the purposes of this case that this plan is not unreasonable. If a shareholder is not satisfied with the original appraisement, all he has to do is to appeal to the Auditor-General, make known to him the actual condition of the affairs of the bank, and have the error, if any exists, corrected. Hepburn did not see fit to avail himself of this right which he had. He preferred to rest upon his supposed right, under the act of Congress, to limit the power of assessment to the par value. This right, we think, he did not have. It is next insisted that no municipal or school taxes could be assessed upon the shares of the First National Bank of Carlisle, a National bank located within the borough of Carlisle, because by the laws of Pennsylvania, as is claimed, other moneyed capital in the hands of individual citizens at that place is exempt from such taxation. In support of this claim it is shown that all mortgages, judgments, recognizances, and moneys owing upon articles of agreement for the sale of real estate are exempt from taxation in that borough except for State purposes. This is a partial exemption only. It was evidently intended to prevent a double burden by the taxation both of property and debts secured upon it. Necessarily there may be other moneyed capital in the locality than such as is exempt. If there is, moneyed capital, as such, is not exempt. Some part of it only is. It could not have been, the intention of Congress to exempt bank shares from taxation because some moneyed capital was exempt. Certainly there is no presumption in favor of such an intention. To have effect it must be manifest. The affirmative of the proposition rests upon him who asserts it. In this case it has not been made to appear. Judgment affirmed. Farmers and Mechanics' National Bank v. Dearing. FARMERS AND MECHANICS' NATIONAL BANK V. DEARING. (91 U. S. 29.) Usury- National banks are not governed by State laws as to. The provisions of the National Banking Act imposing penalties upon National banks for taking usury, supersede the State laws upon that subject.* National banks organized under the act are the instruments designed to be used to aid the government in the administration of an important branch of the public service; and Congress, which is the sole judge of the necessity for their creation, having brought them into existence, the States can exercise no control over them, nor in any wise affect their operation, except so far as it may see proper to permit. E RROR to the Court of Appeals of the State of New York. E. G. Spaulding, for plaintiff in error. The real question presented in this case is, whether the discount of a note by a National bank, organized under the act of Congress, approved June 3, 1864, at a rate of interest then allowed by the statutes of the State where such bank is located, renders it liable to the penalty for usury provided by the State statute. The act of June 3, 1864, supersedes the State laws imposing penalties for usury in so far as they are applicable to National banks. Davis, Receiver, & Co. v. Randall, 115 Mass. 547; Central National Bank v. Pratt, id. 539; Brown v. National Bank of Erie, 72 Penn. St. 209; Wiley v. Starbuck, 44 Ind. 298; Tiffany v. Missouri State Bank, 18 Wall. 409; Citizens' National Bank of Piqua v. Leming, 8 Int. Rev. Record, 132; First National Bank of Columbus v. Garlinghouse, 22 Ohio St. 492.; S. C., 10 Am. Rep. 751. Thad. C. Davis, for defendant in error. No privilege of immunity from the usury laws of the State is conferred upon the National banks by the act of Congress of 1864; and a contract for a loan made in the State of New York with one of these organiza * See Tiffany v. Bank, ante, p. 90; Lucas v. Bank, post; Central National Bank v. Pratt, post; Hintermister v. First National Bank, post; Re Wild, post; Wiley v. Starbuck, post; National Exchange Bank v. Moore, post; Davis v. Randall, post; Shunk v. Bank, post; First National Bank v. Garlinghouse, post; Higley v. Bank, post. Farmers and Mechanics' National Bank v. Dearing. tions, by which it reserved a greater rate of interest than seven per cent, is void. First National Bank of Whitehall v. Lamb, 50 N. Y. 95; S. C., 10 Am. Rep. 438. Mr. Justice SWAYNE delivered the opinion of the court. The question presented for our determination involves the construction of the provisions of the National Bank Act of Congress of the 3d of June, 1864 (13 Stat. 99), upon the subject of the interest to be taken by the institutions organized under that act. The plaintiff in error is one of those institutions. The thirtieth section of the act declares "that every association may take, reserve, and charge, in any loan or discount made, or upon any notes, bill of exchange, or other evidences of debt, interest at the rate allowed by the laws of the State or Territory where the bank is located, and no more; except that where, by the laws of any State, a different rate is limited for banks of issue organized under State laws, the rates so limited shall be allowed for associations organized in any such State under this act. And, when no rate is fixed by the laws of the State or Territory, the bank may take, receive, reserve, or charge at a rate not exceeding seven per centum, and such interest may be takeu in advance, reckoning the days for which the note, bill, or other evidence of debt has to run. And the knowingly taking, receiving, reserving, or charging a rate of interest greater than aforesaid shall be held and adjudged a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. And, in case a greater rate of interest has been paid, the person or persons paying the same, or their legal representatives, may recover back, in any action of debt, twice the amount of interest thus paid from the association taking or receiving the same, provided that such action is commenced within two years from the time the usurious transaction occurred. But the purchase, discount, or sale of a bona fide bill of exchange, payable at another place than the place of such purchase, discount, or sale at not more than the current rate of exchange for sight drafts, in addition to the interest, shall not be considered as taking or receiving a greater rate of interest. The facts of the case are few and simple. On the 2d of September, 1874, it was agreed between the parties that Dearing should make his promissory note to one Deitman for $2,000, payable one month from date, and that the bank should discount the note for |